As you might know, ABM Industries Incorporated (NYSE:ABM) just kicked off its latest quarterly results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.8% to hit US$2.1b. ABM Industries reported statutory earnings per share (EPS) US$0.70, which was a notable 17% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, ABM Industries' eight analysts currently expect revenues in 2024 to be US$8.20b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plummet 29% to US$2.89 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$8.13b and earnings per share (EPS) of US$2.82 in 2024. So the consensus seems to have become somewhat more optimistic on ABM Industries' earnings potential following these results.
The consensus price target was unchanged at US$50.83, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values ABM Industries at US$60.00 per share, while the most bearish prices it at US$45.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that ABM Industries' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.4% growth on an annualised basis. This is compared to a historical growth rate of 6.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than ABM Industries.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards ABM Industries following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that ABM Industries' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for ABM Industries going out to 2026, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 3 warning signs for ABM Industries (1 is potentially serious!) that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.